The Centers for Medicare & Medicaid Services (CMS) issued a final rule on Feb.12, 2016 that requires Medicare providers and suppliers to report and return overpayments by the later of (a) 60 days after the date an overpayment is identified or (b) the due date of any corresponding cost report, if applicable. This rule applies to Part A and Part B providers and suppliers, with Medicare Parts C and D covered under a 2014 final rule.

It is critical to note that providers and suppliers who do not comply with this 60-day deadline could be subject to false claims liability (treble damages plus $11,000 per claim, civil monetary penalties, and exclusion from the Medicare and Medicaid programs).

One of the issues that has arisen with respect to the reporting and refund obligation is when an overpayment is identified. The final rule states that a provider or supplier has identified an overpayment when the provider or supplier has or should have, through the exercise of reasonable diligence, determined that the provider or supplier has received an overpayment and quantified the amount of the overpayment. The final rule establishes six months as the allowed investigation period after receiving credible information of overpayment, so providers will be required to report and return an identified overpayment within eight months, absent extraordinary circumstances.

The final rule also clarifies the lookback period for overpayments. Overpayments must be reported and returned if a provider or supplier identifies the overpayment within six years of the date the overpayment was received. This lookback period was shortened from 10 years in the proposed rule.